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Simon P. Anderson

This article describes the recent developments in online advertising and provides a mostly theory-oriented survey on advertising on the Internet. Social networking is marked by a (one-sided) positive ...
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This article describes the recent developments in online advertising and provides a mostly theory-oriented survey on advertising on the Internet. Social networking is marked by a (one-sided) positive network effect. Advertising pricing in traditional media is based on measures of expected impressions. Technology available on the Internet has allowed advertisers to track the performance of ads. Advertising finance is not the only revenue source for websites. The logit model offers a convenient way to think about the effect of the importance of the site and the number of ads it presents. It is noted that low-quality sites have lots of ads and are free. Higher pricing of messages results in more examination, less congestion, and better matches for both sides of the market. Markets provide the goods that consumers want to buy.Less

Jeffrey D. Sachs

Sub-Saharan Africa’s opportunity to escape from poverty is real and opportune, but the delayed demographic transition to low mortality and low fertility poses a serious risk. Without a ...
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Sub-Saharan Africa’s opportunity to escape from poverty is real and opportune, but the delayed demographic transition to low mortality and low fertility poses a serious risk. Without a faster demographic transition, Africa is likely to experience an unmanageable surge of population, youth dependency, etc. The demographic transition would combine greatly improved health outcomes with a large, rapid, and voluntary reduction of fertility rates. A low-fertility trajectory has the characteristics of a lower population growth rate and youth dependency ratio; and a higher ratio of arable land to population, rate of urbanization, level of schooling, level of human capital, total factor productivity, and GDP per capita. Accelerating the demographic transition would make it possible to limit the rise in Africa’s future population substantially, and thereby accelerate urbanization, schooling, technological advance, and economic growth.

Célestin Monga and Justin Yifu Lin

This introductory chapter of the second volume of the Handbook discusses Africa’s changing economic policy and institutional frameworks, and presents the ways forward. It starts with a ...
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This introductory chapter of the second volume of the Handbook discusses Africa’s changing economic policy and institutional frameworks, and presents the ways forward. It starts with a chronicle of the rise and fall of the main economic strategies adopted by most African countries after independence, and highlights their rationale and shortcomings. It then draws some lessons to be learned from failures and successes, and stresses the inappropriate tendency of African policymakers to take as reference models the most advanced economies and try to replicate their strategies and policies mimetically. It argues that economic policy in developing countries be primarily conceived as an exercise of strategic selection, and concludes by insisting on the need for humility in the quest for relevant knowledge.

Paul Collier

This article explores Africa’s new economic opportunities, paying particular attention to two economic prospects that are better than at any time since Africa gained independence. More ...
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This article explores Africa’s new economic opportunities, paying particular attention to two economic prospects that are better than at any time since Africa gained independence. More specifically, it considers the exploitation of recent resource discoveries as a major source of revenues for Africa and the continent’s realistic chance at industrialization as China shifts its more labor-intensive manufacturing offshore. The article first assesses the implications of China’s economic growth both for middle-income countries globally and for low-income Africa, especially in terms of demand. It then looks at Africa’s distinctive geography and its important consequences, citing how resource endowment and location generate a simple but useful two-by-two categorization of Africa’s countries: coastal resource-scarce countries; landlocked resource-scarce countries; landlocked resource-rich countries; and coastal resource-rich countries. Finally, the article examines how Africa’s resource-rich and ethnically fragmented societies have influenced political allegiance.

Margaret McMillan and Kenneth Harttgen

This chapter examines Africa’s structural transformation, from its prolonged period of weak economic growth since the 1970s to the period of stronger growth over the past decade. It first ...
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This chapter examines Africa’s structural transformation, from its prolonged period of weak economic growth since the 1970s to the period of stronger growth over the past decade. It first describes the nature of structural change in Africa over the period 1960–2010 and compares structural change in Africa to that in other regions such as East Asia and Latin America over the same time period, paying particular attention to average incomes and level of employment shares across sectors including agriculture, manufacturing, and industry. It then considers evidence showing that structural change contributed positively to economic growth in Africa between 1960 and 1975, but negatively between 1975 and 2000 and positively again between 2000 and 2010. The chapter also reflects on the “data problem” and describes an empirical approach for understanding structural change in Africa.

M. Freire, S. Lall, and D. Leipziger

This chapter examines Africa’s urbanization and the challenges and opportunities it presents, with emphasis on what it will take to make African cities efficient, sustainable, and ...
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This chapter examines Africa’s urbanization and the challenges and opportunities it presents, with emphasis on what it will take to make African cities efficient, sustainable, and inclusive. Using economic geography as an organizing framework, it proposes policies that not only support agglomeration benefits but also manage congestion costs. The discussion begins by sketching key elements of African urbanization (heterogeneity, income levels, capital investment, etc.) followed by a review of recent literature on urban growth models and how they apply to Africa’s urbanization process. It then considers what should be done to encourage efficient and inclusive African cities, while taking into account the diversity of countries as well as the continent’s geographical and social division.

Célestin Monga and Justin Yifu Lin

This introductory chapter presents the objectives of this volume and discusses the challenges of producing relevant knowledge. It starts with an exploration of the reasons why Africa has ...
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This introductory chapter presents the objectives of this volume and discusses the challenges of producing relevant knowledge. It starts with an exploration of the reasons why Africa has remained neglected in economics, despite its important contributions to the discipline. It then highlights Africa’s enduring intellectual influence on some of the world’s leading economists. It discusses the traditional reasons why that deep positive influence is little known and rarely acknowledged in mainstream economics. It also offers a different explanation of the neglect of Africa as a rich source of economic knowledge, highlighting the fact that economic thinking on Africa has generally mirrored the general evolution of macroeconomics and the dominant frameworks of analysis of the continent’s low-income countries have always been fraught with analytical sins and mimetic choices.

Mark R. Thomas and Marcelo M. Giugale

African economies did not accumulate serious debt until the 1980s, when unprecedented export credits and development lending combined with slowing exports to send debt ratios climbing. ...
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African economies did not accumulate serious debt until the 1980s, when unprecedented export credits and development lending combined with slowing exports to send debt ratios climbing. This build-up became exponential in the 1990s. Influenced by defaults elsewhere, particularly in Latin America, early discussions of debt relief for Africa emphasized attracting private capital rather than writing off debt outright. The original 1996 Heavily Indebted Poor Countries (HIPC) initiative reflected this gradualism; only upon its 1999 enhancement did Africa receive real relief. By 2005, and the announcement of the Multilateral Debt Relief Initiative (MDRI), HIPC relief approached US$40 billion. By 2014, African debt relief in total was of the order of US$120 billion, with tangible effects on economic stability and on anti-poverty spending. This newfound economic stability has in turn ushered in increased mineral exploration and discovery, with a resulting boom in spending and borrowing on international markets, which could yet lead to new debt distress.

Ernest Aryeetey

This chapter examines the role of Development Banks (DBs) as national and regional financial institutions that provide medium- to long-term capital for investment in various sectors of the ...
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This chapter examines the role of Development Banks (DBs) as national and regional financial institutions that provide medium- to long-term capital for investment in various sectors of the African economy, particularly those that private commercial lenders are unwilling/unable to reach. More specifically, it considers the case for and the historical roles of DBs in financing Africa’s economic development. After presenting the generic case made for DBs, the article traces the history of DBs in Africa and discusses policies and practices across the region since independence. It then analyses why the economic rationale for DBs has been apparently unsuccessful in the presence of bottlenecks such as rent-seeking and political patronage. The article also evaluates alternative sources of development financing before concluding with a summary of lessons that can be learned from Africa’s experience with DBs in terms of development economics.

Alexander Moradi and Kalle Hirvonen

African adult populations are remarkably tall for the low income levels that prevail at the country level. The average African woman is about 158.5 cm tall, whereas the low gross domestic ...
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African adult populations are remarkably tall for the low income levels that prevail at the country level. The average African woman is about 158.5 cm tall, whereas the low gross domestic product per capita would lead us to expect a mean height more similar to the shortest populations in the world, about 4 cm shorter. This is the case in spite of the fact that indicators of socioeconomic status and height are positively correlated within each country. The chapter also shows that the physical stature of African children fit well into the global income–height relationship. Hence, we conclude that the anomaly in the income–height nexus at country level appears to originate between childhood and adulthood. We present evidence for considerable catch-up growth involving entire populations. We discuss possible reasons for this catch-up growth including genetics, and, above all, better nutrition and health conditions during adolescence.